Don’t be caught off guard if you’re facing a foreclosure. Read on to learn about each step in a Florida foreclosure—from missing your first payment all the way to eviction. (To learn what to do, and what not do, if you’re facing a foreclosure, read Foreclosure Do’s and Don’ts.)
Florida Mortgage Loans
People who take out a loan to purchase residential property in Florida typically sign a promissory note and a mortgage. A promissory note is basically an IOU that contains the borrower’s promise to repay the loan, as well as the terms for repayment. The mortgage creates a security interest in the property.
What Happens When You Don’t Make Your Mortgage Payments
If you miss a payment, most loans include a grace period of ten or fifteen days after which time the servicer will assess a late fee. Each month you miss a payment, the servicer will charge you a late fee. To find out the late charge amount and grace period for your loan, look at the promissory note that you signed. This information can also be found on your monthly mortgage statement. (Learn more about fees that the servicer can charge if you’re late on mortgage payments.)
In most cases, federal mortgage servicing laws require the servicer to contact the borrower by phone and in writing during the preforeclosure period. (12 C.F.R. § 1024.39). Don’t ignore the phone calls and letters. They offer a good opportunity for you to discuss loss mitigation options —like a loan modification, forbearance, or payment plan—with the servicer. Also, federal law generally requires the servicer to wait until you’re more than 120 days delinquent on payments before officially starting a foreclosure. (To learn more, read How Soon Can Foreclosure Begin?)
What’s a Breach Letter?
Many Florida mortgages contain a clause that requires the lender to send the borrower a breach letter. The letter must inform the borrower that the loan is in default and specify: the default, the action required to cure the default, a date (usually not less than 30 days from the date the notice is given to the borrower) by which the default must be cured, and that failure to cure the default on or before the date specified in the notice may result in acceleration of the debt and sale of the property. Usually, the servicer will send this letter when you’re around 90 days’ delinquent on the loan.
Florida Foreclosures
In Florida, foreclosures are judicial, which means the lender (the plaintiff) must file a lawsuit in state court. (To learn more about the difference between judicial and nonjudicial foreclosure, and the procedures for each, see Will Your Foreclosure Take Place In or Out of Court?)
The lender’s attorney initiates the foreclosure by filing a complaint with the court and serving it to the borrower, along with a summons that provides 20 days to file an answer. If you don’t respond to the lawsuit by the deadline, the lender can ask the court for a default judgment. On the other hand, if you file an answer, then the lender can’t get a default judgment. Instead, it will likely file a motion for summary judgment. Unless you have some defense or counterclaim that would justify or excuse your nonpayment, the lender will likely win the motion for summary judgment and the court will render a final judgment of foreclosure. But if the judge denies the lender’s motion for summary judgment—say you have a potentially legitimate defense to the foreclosure—the foreclosure will proceed to discovery and trial. If you lose at trial, the court will enter a final judgment of foreclosure against you.
Expedited Foreclosure Process in Florida
Florida law provides a procedure designed to speed up the foreclosure process in uncontested cases or in cases where the homeowner does not have a genuine defense. (To learn more, see Fast-Track Foreclosure Process in Florida.)
Setting the Foreclosure Sale
If the lender gets a judgment of foreclosure, the court schedules a sale of the property not less than 20 days, but no more than 35 days, after the judgment (unless the plaintiff or plaintiff’s attorney consents to additional time). (Fla. Stat. § 45.031).
Notice of Sale Posting Requirements
A notice of sale must be published in a newspaper for two consecutive weeks with the second publication at least five days before the sale. (Fla. Stat. § 45.031).
The Foreclosure Sale
At the foreclosure sale, the property will be sold to the highest bidder, which is often the foreclosing lender. (The lender usually makes a credit bid at the foreclosure sale.) If the lender is the highest bidder, the property becomes REO.
Certificate of sale. Under Florida law, the court clerk must promptly file a certificate of sale after the foreclosure sale takes place. (Fla. Stat. Ann. § 45.031). This usually occurs within one day of the sale.
Certificate of title. The borrower has ten days after the certificate of sale to file an objection to the amount of the bid. After ten days, the clerk confirms the sale and issues a certificate of title to the purchaser. (Fla. Stat. Ann. § 45.031).
Deficiency Judgment Following Sale
In Florida, a lender may obtain a deficiency judgment as part of the foreclosure action or in a separate action within one year, starting on the day after the court clerk issues a certificate of title to the buyer who purchased the home at the foreclosure sale. (Fla. Stat. § 702.06, Fla. Stat. § 95-11).
The court has flexibility regarding the amount of the deficiency, which can’t exceed the difference between the judgment amount and the fair market value in the case of an owner-occupied residential property. (Fla. Stat. § 702.06).
Eviction Following Foreclosure
If the foreclosed borrower doesn’t vacate the property following the foreclosure sale, the new owner (usually the foreclosing lender) will likely:
The eviction process is typically part of the foreclosure action with the right to possession included in the judgment. After the certificate of title is issued, the lender files a motion for a writ of possession. When the motion is granted, the clerk of court issues the writ, which gives you 24 hours to move out, and the sheriff posts it to the property. If you don’t move out, the sheriff will make you leave.
Talk to a Lawyer
If you need more information about how foreclosures work in Florida, or want to learn whether you have any potential defenses to a foreclosure, consider talking to a foreclosure lawyer.
Foreclosure can be an intimidating and scary experience. The stress of potentially losing your home can drive you to make mistakes, either by doing the wrong thing or failing to act at all.
Because your actions are vitally important if you want to keep your home—or at least get through the process with as little anxiety as possible—it’s essential that you to learn the do’s and don’ts when facing a foreclosure:
Contact a HUD-approved housing counselor for assistance. If you want to apply for a foreclosure alternative—like a loan modification, short sale, or deed in lieu of foreclosure—a HUD-approved housing counselor can tell you more about these options, evaluate your financial situation, and help you deal with your servicer.
Find out how foreclosure works. Depending on state law and your circumstances, your foreclosure could be judicial or nonjudicial. You should learn each step in the foreclosure process so you aren’t caught off guard at any point. Also, find out about federal laws and state laws that can protect you while you’re in foreclosure.
Make a record of all your communications with your servicer. Keep track of when you call, who you spoke to, and what you talked about. You might need this information later on to help you fight the foreclosure. Also, keep a folder with all correspondence from the lender, servicer, court, or foreclosure trustee. This way, you’ll have a good idea about the status of your case. And, you might have a defense to the foreclosure if you don’t get certain documents.
Participate in foreclosure mediation, if your state, county, or city, offers it.Foreclosure mediation brings the borrower and lender (or its representative) to the table, along with a neutral mediator, with the goal of working out a way to resolve the delinquency. One study showed that homeowners who participate in mediation are 1.7 times more likely to avoid foreclosure than those who don’t.
Find out if your state has a Hardest Hit Fund program. Hardest Hit Fund programs offer financial assistance to homeowners. You might qualify for money to get caught up on the loan or pay future mortgage payments, for example.
Avoid foreclosure rescue scams. Be wary of letters and phone calls from for-profit companies—especially companies offering to help you get a loan modification. While these companies’ letters look official and their sales pitch might sound good, companies that offer to stop the foreclosure for a fee are often scammers. (Learn about foreclosure rescue scams to avoid.)
Don’t:
Ignore phone calls or letters from your servicer. Calls and letters from your servicer will likely explain any options you have to avoid a foreclosure and how to apply for those options.
Ignore letters from the court or a foreclosure trustee. Correspondence from the court or a trustee will contain foreclosure information, including important dates—like the sale date—and details about your rights during the foreclosure.
Assume the servicer is always correct. Servicers are well-known for making mistakes that violate the law when processing foreclosures. Again, you should understand the specifics of both federal and state foreclosure laws and procedures. If the servicer messes up, you might have a defense to the foreclosure.
Wait until the foreclosure is almost over to try to save your home. You’ll have more options if you address the problem early on. The longer you wait and the further you fall behind in payments, the fewer options you’ll have.
Pay upfront fees (or fees for help that you can get for free). If a foreclosure rescue company asks for a hefty upfront fee from you, beware. Many states have laws prohibiting companies from collecting money before performing foreclosure services, as well as other restrictions on foreclosure rescue activities. You also shouldn’t pay a fee to a private company for housing counseling (HUD-approved housing counselors will help you without charge) or to help you apply to a Hardest Hit Fund program. You can easily apply for Hardest Hit Fund assistance on your own.
Make your mortgage payments to anyone other than your mortgage servicer. Foreclosure rescue companies sometimes say you should pay them instead of your servicer. But this is usually a really bad idea. The company might take your money, fail to stop the foreclosure (or not even try), and then you’ll be even further behind on your payments.
Move out early. If you abandon the home, you’ll miss out on the chance to stay there for free during the foreclosure. Also, in order to qualify for assistance, homeowners usually have to be living in their home. Another thing to keep in mind is that you’re still responsible for the property until the foreclosure ends, even if you aren’t living there. You don’t want to become the victim of a zombie foreclosure after moving out early. (Learn when you have to leave your home when it’s in foreclosure.)
KNOWLEDGEABLE FORECLOSURE PROCESS LAWYERS IN CALIFORNIA
Most California residents have heard of the concept of foreclosure and are no doubt aware of the prevalence of foreclosures during the 2008 housing crisis. But few understand how the mortgage foreclosure process actually works, or what banks and lenders must do to reclaim your home.
While many may believe that foreclosures are a judicial process that requires a lender to go before the courts in order to work out your financial issues, this is not usually the case. Most foreclosures in California are non-judicial and happen through a more administrative process.
FORECLOSURES IN RANCHO CUCAMONGA
The foreclosure process in California begins with the owner of the property, when he or she misses the first payment on a mortgage loan. This could be for any number of reasons – perhaps a family member loses their job, or an urgent medical crisis arises. Regardless of the circumstances, the failure to make a timely payment puts the bank on notice that the owner may have a problem.
Missing a payment by a few days usually is not a problem, as long as a homeowner quickly rectifies the issue and makes the payment as soon as possible. Rather, real issues begin to arise when the homeowner goes into default. Default typically occurs when the homeowner is behind on payments for 90 days.
A notice of default is the second step in the foreclosure process. This will happen after the homeowner enters default. The mortgage lender will typically file a notice of default with the court, and must then provide the owner with a copy within ten days. The owner’s copy will explain why the owner is in default and the options for getting out of default.
Depending on the bank or mortgage lender, an owner may be able to create a payment plan that will help to get out of default, and pay off all outstanding loan payments, interest, and fees.
When The Bank Or Lender Is Not Getting Paid
After an owner receives a notice of default, most lenders will give them three months to bring the loan current and make all outstanding payments. At the 180 day mark (90 days after default), the lender may begin official foreclosure on the home if the owner is still unable to pay.
Foreclosure means that the bank can attempt to auction off the home to recover the money that it has lended that the owner is no longer able to repay. This is usually done through what is known as a trustee sale. When the bank decides to go this route, it will notify the owner by providing a notice of trustee sale that sets the date for the auction of the home.
The bank must give the owner up to 20 days after the service of a notice of trustee sale to actually hold the auction to sell the home to the highest bidder. This may give the owner some last ditch opportunities to attempt to recover the home, either through negotiation or through the courts.
If the house does sell, the owner will be relieved of your financial obligations to the lender, even if the house sells for less than the amount that is currently owed on the loan. At the time of sale the owner loses both access to the home and responsibility for the debt incurred.
CALIFORNIA ATTORNEYS HELPING ALL PARTIES THROUGH THE FORECLOSURE PROCESS
The foreclosure process can be difficult for all parties involved, including lenders, banks, and the debtor who owns the mortgage. Having a clear understanding of the process involved can go a long way toward avoiding disputes or difficulties in the process. At CKB Vienna LLP our mortgage and banking attorneys have assisted clients on both side of the transaction through the foreclosure process and are equipped to handle simple foreclosures or complicated transactions. For more information, contact us online or at 909-980-1040.
Sometimes life takes us down a bumpy path, which can leave us in less than ideal situations like bankruptcy or foreclosure. That was the unfortunate case so many people found themselves in during the housing crisis nearly 10 years ago. But now, with more emphasis on licensing mortgage bankers, increasing ethical standards and laws, and a better job market, the future looks brighter. That’s not to say many people aren’t still impacted by the crash.
If you’re someone who went through bankruptcy and/or foreclosure during the housing crisis, you might think you can’t get another home loan. But before you settle for renting, consider this: It’s possible to qualify for a mortgage even after bankruptcy or foreclosure. The future really does look brighter now, doesn’t it?
HOW DO BANKRUPTCIES AND FORECLOSURES HAPPEN?
Often times, it’s longterm unemployment that can result in a foreclosure. Foreclosures are a result of not being able to pay your mortgage. Basically, if you miss a payment deadline, your lender can take your home to take care of the debt. During this process, lenders will notify credit bureaus, which will likely harm your credit. The thing is, lenders don’t like foreclosures. It’s actually quite expensive and time consuming for them. So if you think you might miss a payment, it’s better to be proactive and talk to your lender about possible options to avoid foreclosure.
A good way to stay aware of your payment due dates is to check your promissory note, which also includes information on when and how much late fees are.
If you’re unable to pay your mortgage, your lender will take your home to pay off debt through the legal action of foreclosure. They then sell the home, and then whatever is left over is what you’re still required to pay. For example, if you borrowed $250,000 and the foreclosed home sold for $100,000, then you still owe $150,000. This is called a “deficiency on the loan.”
The problem is, other than not having a home, if you don’t have a job, it’s a bit unrealistic to pay off the deficiency. After all, not having a job is what possibly got you here in the first place. So, this leads homeowners to the next step – bankruptcy. In this case, you may file for Chapter 7 bankruptcy, where you include your mortgage and house and liquidate those assets to rid yourself of any debt. Another option is Chapter 13 bankruptcy, which essentially allows you to repay your debt in installments.
Homeowners sometimes file for bankruptcy, often times after the foreclosure has occurred and they can’t pay off the deficiency. But people can file for bankruptcy for different reasons unrelated to homes, and it doesn’t always involve a foreclosure.
Filing for bankruptcy is not ideal, but sometimes its the only solution given certain circumstances, and it can ultimately help you get a fresh start and possibly receive a second chance.
The good news is, although many believe this is the end for them, in reality, it’s still possible to get another home down the road.
WAITING PERIODS FOR LOANS
There are a few different loans you could potentially choose from in the event of post-filing of bankruptcy. The ones that are a bit more forgiving are government-insured loans. Since your credit won’t be stellar, choosing between FHA, VA loan, or USDA could be your best bet, as long as you qualify for one of them.
If you don’t qualify for any government-insured loans, but do for a conventional loan, then the wait time is a bit different. Here are the generalwait times for loans:
FHA
Chapter 7 bankruptcy: 2 years
Chapter 13 bankruptcy: At least 1 year of satisfactory payments and court’s approval
Foreclosure: 3 years
VA loan
Chapter 7 bankruptcy: 2 years
Chapter 13 bankruptcy: At least 1 year of satisfactory payments and court’s approval
Foreclosure: 2 years
USDA
Chapter 7 bankruptcy: 3 years
Chapter 13 bankruptcy: At least 1 year of satisfactory payments and court’s approval
Foreclosure: 3 years
Conventional loan
Chapter 7 bankruptcy: 4 years
Chapter 13 bankruptcy: 2 years from discharge date or 4 years from dismissal date
Foreclosure: 7 years
Also keep in mind guidelines can vary depending on when your foreclosure and bankruptcy were filed and reasons behind the filings. There are some differences between the outcome of the bankruptcy in terms of “dismissal” vs. “discharge,” as well as foreclosure “completion date” vs. “disbursement date.” The completion date is the date the lender foreclosed, and the disbursement date is the date that the lender or bank sold the home to someone else.
REBUILD YOUR CREDIT AND PREPARE FOR THE MORTGAGE APPLICATION
While you wait things out before applying for a mortgage again, a good step forward in the right direction would be to work on rebuilding your credit.
As you are aware from your first purchase, credit scores play a big part in the loan you qualify for. Here are a few things to consider doing:
Check your credit report first to know where you stand.
Keep balances low and pay off any balances in a timely manner instead of moving it around.
Stay current on your payments. The longer you stay current, the more your score should increase with time.
Set up reminders to help you stay on top of your payments.
Don’t open up a bunch of credit accounts in a short-period of time, and don’t close unused credit cards, especially in a short period of time. Closing them won’t make them go away.
Introduce a good mix of different types of credit.
Consider applying for a credit-builder loan which basically helps you build your credit like a forced savings account. It makes you put money away each month that you’ll get in the end.
Talk to your mortgage banker for more unique tips that are better tailored to you.
It’s tough to go through bankruptcy and foreclosure, but you’re not alone, and we get it. So just keep in mind it’s possible to turn things around and improve your financial situation with some dedication, research, help from your mortgage banker, and consistency with working on improving your credit. For more home buying tips, visit the Atlantic Bay blog.
Foreclosure is a legal process through which lenders reclaim properties from borrowers who can no longer afford to meet their monthly mortgage obligations. Home foreclosure laws and procedures vary from state-to-state. So depending on where you live — or where you’re looking to buy — the foreclosure timeline can and often does change.
Below is a state foreclosure laws timeline that is designed to give you a comprehensive overview of the process throughout the United States. Click on any state name to drill down and learn more details about the foreclosure procedures in that state.
